Port of Anchorage expansion marks decade of uncertainty


The Open Cell Sheet Pile design seen in this aerial photo is at the center of the controversy at the stalled Port of Anchorage expansion project. A lawsuit by the Municipality of Anchorage is alleging the design was flawed, while the engineering firm counters it was improperly installed. No work has taken place at the port since 2010 and the price tag for completing the project may top $1 billion at a time when the state is sharply curtailing capital spending

Photo/Courtesy/Municipality of Anchorage

A revamped and bigger Port of Anchorage was supposed to open in 2013 —that didn’t happen.

Instead, the Municipality of Anchorage commissioned new dock designs and took several players in the stalled 10-year construction project to court.

On March 8 the municipality filed a lawsuit against project manager Integrated Concepts and Research Corp.; dock designer PND Engineers Inc.; and CH2M Hill Alaska, which now owns VECO, a firm that consulted on the project in its early stages.

The suit came on the heels of design suitability and new concept design reports, both done by CH2M Hill for the municipality. The suitability study — later affirmed by another consulting firm — found that PND’s patented Open Cell Sheet Pile design used in earlier construction did not meet seismic and design-life requirements.

Anchorage Mayor Dan Sullivan, who was alerted to construction problems at the port shortly after he took office in 2009, has said what was once a $200 million-plus project could end up costing more than $1 billion when it is finally fixed.

CH2M Hill’s design options are for a pile-supported dock similar to what is at the port now, as opposed to a backfilled-sheet pile system.

PND has argued continuously that CH2M Hill changed the seismic and design-life criteria in their report, which mentions a 75-year operating life, as opposed the 50 years PND officials said they designed for. Further, PND President John Pickering has said the project would have moved along without a problem if not for lax project management and improper installation of the sheet piles at the port — what ICRC is being sued for.

In August an Inspector General’s report was released that blasted the U.S. Maritime Administration’s, or MARAD, handling of the Anchorage and other port construction projects across the country. In 2003, MARAD agreed to oversee the project for the municipality.

Recently, an attempt by the municipality to get the lawsuit moved from federal to state court, where it was originally filed, was denied. Arguments on the defendants’ motions for dismissal are scheduled for Jan. 9.

2. Alaska Air Group profits reach new highs

Alaska Air Group Inc. had record profits in 2012 and is well on its way to breaking those in 2013.

The company that owns Alaska Airlines and regional carrier Horizon Air reported record first and third quarter income this year after the company posted a record $339 million of adjusted profit in 2012.

With $289 million in profits during the third quarter of 2013, the company had its best quarter ever and extended its positive results run to 18 consecutive quarters.

Company CEO Brad Tilden said during the third quarter earnings call that 2013 should break last year’s profitability record.

Alaska Air Group executives have attributed the success to a fuel-efficient fleet of aircraft and a business model emphasizing debt reduction.

During the third quarter the company began issuing quarterly dividends to its shareholders and increased bag and flight-change fees.

In March, Horizon Air will begin flying Bombardier Q400 turboprops on its Anchorage-Fairbanks and Anchorage-Kodiak routes, as opposed to the Alaska Airlines-operated Boeing 737s that have flown the routes for years. The company has said the change will allow it to keep fares down by flying the more efficient, smaller aircraft. Capacity will not be affected, the company said, as more flights will be flown daily.

3. Changes abound at the railroad in 2013

In March, the Alaska Railroad Corp. was forced to cut 54 positions; in November it changed leaders and throughout the year it worked to comply with new federal safety requirements — all while extending its reach at both ends.

The workforce reduction included 29 layoffs as part of a restructuring of the state-owned company’s management tier, then-president and CEO Chris Aadnesen said.

Aadnesen stepped down from his position Oct. 31 at the end of his a three-year contract to tend to a family medical issue in Texas.

Bill O’Leary, former Alaska Railroad vice president and chief financial officer succeeded Aadnesen.

Since 2008 the railroad has trimmed its workforce from about 800 full-time workers down to 570 such employees. The labor cuts are a result of reduced coal and jet fuel exports from the state, the railroad’s primary freight commodities.

The Alaska Railroad is also in the midst of implementing Positive Train Control, a federal safety mandate for railroad companies with passenger service. Spokesman Tim Sullivan said railroad needs state help to fund the $150 million digital communications network. In April, it received $19.1 million of a $35 million legislative request.

On the construction side, hundreds of millions of dollars worth of work continued on rail extensions east of Fairbanks across the Tanana River and from Houston to Port MacKenzie in Southcentral. The northern rail extension is under budget and should be finished in late 2014, Sullivan has said. The Port MacKenzie extension should wrap up in 2016 if it gets the roughly $100 million it needs.

4. Marine Highway turns 50 with issues for aging fleet

It was a bittersweet year for the Alaska Marine Highway System.

The 2013 travel season kicked off with a celebrated “Golden Voyage” through Southeast on the system’s original ferry the M/V Malaspina in May to mark its 50th anniversary.

Special sailings sold out, and the Malaspina was well received in all of the communities it docked at during the weeklong event.

At the time, the M/V Tustumena — which serves Southcentral and Western Alaska — was several weeks delayed from returning to service after a winter overhaul in Seward.

Ultimately, the Tustumena wouldn’t return to service until October because it needed more work than was first thought and many of the original repairs didn’t pass U.S. Coast Guard inspection. AMHS spokesman Jeremy Woodrow said the faulty repairs were fixed at the expense of the contractor at Seward Drydock.

Ferry overhauls are often funded with Federal Highway Administration dollars, meaning the work must be awarded to the lowest bidder in accordance with the federal procurement procedures.

Design work on the two Alaska Class ferries planned for operation in Lynn Canal north of Juneau was completed late in the year. Construction of the first 280-foot “day boat” will likely begin at Alaska Ship and Drydock Inc. in mid-2014, AMHS leaders have said, with both vessels ready to replace a mainliner ferry sometime in 2016 if all well.

Early design work is underway on a Tustumena replacement. That work is about a year behind the day boat process, but funding is needed for what is expected to be a $200 million-plus project.

5. Mergers and acquisitions

Multi-modal shipper Lynden Inc. bought out one of its main competitors in Southeast and Carlile Transportation System trucks are now under the Saltchuck Resources Inc. umbrella.

Lynden announced its intent to purchase Northland Services in April, but the sale was investigated by the state attorney general’s office because of concerns it might create a monopoly in the region. The deal was finalized in November after the state proposed that Samson Tug and Barge Inc. be allowed to lease space and equipment formerly owned by Northland. Lynden is represented in Southeast by its auxiliary company Alaska Marine Lines.

Former Carlile CEO and co-founder Harry McDonald said Saltchuk had the resources to capitalize on business opportunities Carlile couldn’t before and that it intended to operate Carlile as an independent company.

Carlile was added to the Totem Ocean Trailer Express network in the beginning of June, according to a TOTE release. TOTE, along with Cook Inlet Tug and Barge Inc., Northern Air Cargo and North Star Petroleum Co., is a subsidiary of Seattle-based Saltchuk.

Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com.

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